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Exploring Rural Markets for Private Life
Insurance Players in India
-- P K Gupta
In spite of urbanization in India, rural India still lacks in terms of availability of various financial
products, especially the risk products like insurance. Insurance of rural India is still indicating low penetration
levels and poor densities.The situation has not changed
post privatization in 1999. The Insurance
Regulatory and Development Authority (IRDA) has by guidelines, imposed rural insurance obligations on every
insurance player. But, the imposition of these guidelines has not improved the rural penetration. The private
players lack penetration levels in the rural market. The situation of
Life Insurance Corporation of India (LIC) is better
because it has been in existence for decades. The attempt in this paper is to examine the
current status of rural insurance penetration and explore the reasons for poor performance of the private
players in this segment. The results of the survey on rural customers indicating their perception and
attitude towards buying life insurance products have been
presented in the paper. The paper critically examines
the marketing strategies of private life insurance players in the rural segment and offers
suggestions for enhancing penetration and brand image.
© 2009 IUP. All Rights Reserved.
An Economic Analysis of Failure Experience
-- Mahito Okura
The purpose of this study is to investigate the effect of failure experience. This study builds the
two-period model including the educational investment and failure experience by answering the following three
questions. First, if the effect of failure experience exists, how does the investment change in comparison with the
non-existing case? Second, what is the effect of the initial wealth in relation to the effect of failure
experience? Third, what is the situation where the effect of failure experience is large? The results of the model are
as follows: First, if the effect of failure experience exists, the possibility of the investment enlarges. Second, if
the initial wealth is so small and the individual must borrow the money to invest in the second period,
the possibility of the investment with the effect of failure experience becomes small. Third, the high
profitability of the investment, small interest rate, and large initial wealth are the conditions to enlarge the possibility
of investment with the effect of failure experience.
© 2009 IUP. All Rights Reserved.
Life Insurance Companies in India:
Performance and Prospect
-- S Sankaramuthukumar and Saravanan Laxmanan
The insurance penetration and insurance density in India is growing at a slow pace. Most of the life
insurers in India are yet to break even, though they are in operation for more than six years. In this context, the
study on 16 life insurance companies shows that these insurance companies can perform better by going
for strategic partnership with banks and post offices, wholesale inclusion of rural masses, developing
underwriting skills, and tuning grievance redressal mechanism, hiking the Foreign Direct Investment (FDI) limit to
help capital infusion and last but not the least encouraging academic institutions to go for insurance education
in a big way.
© 2009 IUP. All Rights Reserved.
Growing Indian Economy: An Impressive Performance of Life
Insurance Business
-- M V S Srinivasa Rao
India's insurance industry accounted for 12% of total Gross Domestic Product (GDP) in 200-01, the year
in which this sector was liberalized, It increased to 20.1% in 2005-06. The total market for life insurance
was worth about Rs. 35,000 cr in 2000-01, but estimated potential for this segment was Rs. 80,500 cr. If
the average growth rates (20-25%) are sustained, the market would grow to Rs. 260,000 cr by 2010.
Presently, 17 life insurers are operating with 1.2 million agents and 300 brokers in the market (including one
public sector player, LIC). The market share of the private insurers and LIC, in terms of policies underwritten,
was 10.92% and 89.08% in 2005-06 as against 8.52% and 91.48% respectively in 2004-05. The life
insurance industry premium income was Rs. 105,875.76 cr during 2005-06 as against Rs. 82,854.80 cr in
the previous financial year, recording a growth of 27.78%. New policies underwritten were worth Rs.
354.62 lakh in 2005-06 as against Rs. 262.11 lakh during 2004-05 showing an increase of 35.29% as against
a decline of 8.44% in the year before, while the private insurers exhibited a growth of 73.37%.
Total pay-out by the life insurance industry towards commissions in 2005-06 was
Rs. 8,643.29 cr as against Rs. 7,104.46 cr in 2004-05. With a population of more than one billion, 16%
of the rural population is insured, whereas, average population insured in India is 21%. Since, 72% of the
Indian population lives in rural areas, the potential is very attractive. The purpose of this paper is to analyze
the impact of the life insurance business in India.
© 2009 IUP. All Rights Reserved.
Emerging Trends in Indian Insurance Market
-- T N Murty, Riswana Ansari and P Raja Babu
Insurance business is one of the fast emerging financial services, predominantly in the developing
countries like India, in terms of the population it serves. The insurance industry is going through radical
changes in its products as well as in its competitive service strategies towards the customers. During the
long monopoly regime, the public sector attempted many changes in the character and basic policies of
the industry. The Indian insurance market has undergone significant changes during the recent years.
The paper presents the emerging trends in the Indian insurance market.
© 2009 IUP. All Rights Reserved.
Distribution Channels for Incumbent Rural
Insurance Industry
-- Mrinalini Shah
and Shweta Dixit
The Insurance industry is in its nascent stage as far as rural insurance is concerned. It is common
perception and conviction among the insurance companies that it is expensive to do business in the rural areas
despite the fact that 70% of the population resides in rural India. The penetration of rural insurance in India
requires a fresh approach to sell rural insurance products because of the limitations in this business. Since the
activity revolves around agriculture, products such as rain insurance, crop insurance, loss of yield, price
fluctuations in the market and personal accident cover need to be designated for targeting the rural customers. This
paper is conceptual in nature and focuses on different distribution channels which can effectively be captured in
the rural areas.
© 2009 IUP. All Rights Reserved.
Social Insurance for Agricultural Laborers
-- A Pouchepparadjou, N Swaminathan, M Kalamani and K S Kumaravel
The concept of social protection falls under the purview of Social Risk Management and it consists of
several public measures like, reducing vulnerability, improving consumption and enhancing equity which
contributes to the economic development in a participating manner. The Government of India operates the Jana
Shree Bima Yojana scheme through the Life Insurance Corporation of India for the unorganized rural and
urban sector for people below poverty line and marginally above poverty line. An evaluation study was conducted
to evaluate the functioning of the Group Insurance Scheme for agricultural laborers in the Union Territory
of Pondicherry. The scheme covered 69.35% of total (72,095) agricultural laborers living below poverty line
in the age group of 18-60 years. The scheme is having Viable Business Proposition because it captures the
four key aspects of affordability, insurability, marketability and profitability of Viable Business Proposition.
The analysis of cost-benefit ratio for the insured person shows the welfare effect to the agricultural laborers in
the Union Territory of Pondicherry through this scheme. The government must continue to subsidize the
premium to make the scheme continue to be Viable Business Proposition by looking into the welfare effect that
accrues to the society. Enough propaganda should be given to the present scheme to make the public aware
about such social protection to the low-income population.
© 2009 IUP. All Rights Resrved.
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